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Expatriates and School Fees

Once again the BBC gets stuck in to the trials and tribulations of expat life:

A few years ago, competition for places in Dubai’s best international schools was so intense that British expat Jemma Schilbach felt she had to get her two children on the waiting lists for her preferred schools before they were even out of nappies.

A situation to which the average license-fee payer can no doubt relate.

Work ended up taking the family away from Dubai for a couple of years. When they returned in 2014, they were relieved to discover there were plenty more schools to choose from, but there was another issue: cost.

Both Schilbach and her husband, who’d previously worked in jobs where companies paid for children’s schooling, were now self-employed, and would need to pay for their children’s education themselves.

The horrors!

She was impressed with the small class sizes and Foremarke’s reputation, but with tuition fees there starting at 65,000 AED ($18,000) a year, it meant the family had to be more careful about spending to ensure they had the money to send their children, aged five and seven, to the school.

Parents who spend $18k per year on a nursery school for their five year old find they can’t splash out as much as when somebody else was footing the bill. Who knew? Note that these extortionate school fees only get noticed when the parents have to pay themselves.

“We economise on other costs during the year,” says Schilbach, adding that ordering some household items from the UK and closely watching what the family spends on weekends have helped to save pennies. “In our opinion, the money is better spent on educating our children to a high standard.”

And therein lies the whole scam, which is ably propagated by the schools themselves and parents whose status depends on what school their child attends. There is absolutely no need to be spending that kind of money educating children younger than ten or twelve, especially as these aren’t even boarding schools. But hey, it’s your money.

As expatriate contracts change and people accept more flexible benefits, move onto localised employment packages or decide to find their own jobs overseas, finding the money needed for education is a growing challenge for families living abroad. In Dubai, for example, falling oil prices have led to many employers cutting the salaries and benefits packages they are willing to offer their expat staff. It leaves many expats no option but to pay for their children’s schooling themselves, partially or in full.

Well, yes. I am of the opinion that one of the greatest scandals perpetuated by international companies is to dress up expatriate positions (particularly those in the oil industry) as family-friendly and encourage men and women of child-rearing age to embark on careers where overseas postings are mandatory. They effectively promised that entire families could go abroad without any of the traditional drawbacks, taking advantage of the various international booms that were running full-pelt at the time to pay for it all: schools, villas, regular flights home, etc. A generation or two ago there was none of this: expat positions were either set up for men who would leave the family behind (and/or find a new ‘wife’ in a bar upon arrival), or the family was expected to rough it. Things obviously improved since the time Sir Arthur Grimble wrote A Pattern of Islands, but I know old-school Shell expats who lived in places like Gabon and Bintulu who say things were…primitive.

But then the financial, property, oil and gas, and other industries boomed at the same time a generation of women graduates entered the workforce expecting full careers compatible with raising a family, and the international companies – egged on by powerskirts in HR – simply told them they could have the lot. The companies themselves will claim that they needed to offer these packages in order to attract the right people, but I don’t buy it. Personally, I think a lot of these expat policies in the multinationals were put in place by the managerial classes who wanted a tax-free salary in an exotic place without any downsides. The shareholders’ interests didn’t even get a look in.

But now times have changed and what we have is a generation of people mid-career who have gotten used to these all-inclusive family packages now finding they’re no longer available. Whoops. The money just isn’t there any more, but there is another factor at play which I doubt international companies even admit exists: the locals. Places like Dubai, Malaysia, Nigeria, Russia, etc. have changed in the last decade or two and now there are plenty of locals (or locally based people) who can fill the middle management and senior technical positions. As local hires these employees will not get school fees paid for their kids, they have to use their own salaries. These staff might not object to one or two very senior managers getting a full expat package which includes school fees, but they will when they find a mid-level engineer or financial analyst is being handed $18k per year so their toddler can go to a posh private school run by a pencil-necked Brit with a prominent Adam’s apple and a cut-glass accent. The subsidiary itself may also be a joint-venture with local ownership, and the stakeholders might ask why they are paying for the children of wealthy expatriates to go to fancy schools when their own kids are going to the local state school.

And right on cue:

The cost of education is among the most popular topics of discussion on BritishMums. “It’s an employer’s market,” says Schilbach, who founded the site in 2012. “The old-time expat contracts are few and far between these days.”

Indeed.

This month, in a survey by HSBC involving nearly 8,000 expat parents, 62% said it was more expensive to raise a family overseas than at home. Some 58% mentioned that the cost of childcare, in particular, was more expensive.

Well, yes. Maintaining a Western standard of family life outside Western countries is expensive. The trick is to lower your expectations a little.

A separate survey by Singapore-based advisory service ExpatFinder.com, which covered 98 countries and 707 international schools, found fees rose 3.43% last year compared with the year before.

Yes, it’s a racket. The schools guilt-trip the parents and tap into their “my child must have the absolute best” mentality by implying they will be failing their offspring if they don’t cough up extortionate fees to enroll them in their institutions.

The most expensive schools for international education were in China – median fees for children aged 11-12 came in at $36,400 a year – followed by Switzerland ($28,300) and Belgium ($27,800), according to the survey.

The reason it is expensive in China (and Moscow) is because the international schools are full of the children of wealthy locals. The reason they are expensive in Switzerland and Belgium is because of the number of international organisations that are based there, meaning the costs can just be dumped back on the taxpayers somewhere. Whereas I can understand the difficulties of putting expat kids into a Chinese state school system, there is nothing wrong with Belgian or Swiss schools. Yes, there are arguments to be made over curricula and language but hey, you’re abroad: what do you expect? If the kids can’t adapt, then stay at home. I don’t see why taxpayers (or shareholders) should be expected to cough up thousands of dollars per year so that toddlers can avoid having to adapt to a different culture and school system. Case in point:

Emma McHugh, a 39-year-old mother of three and Schilbach’s co-founder at BritishMums, is in the process of returning to Dubai from Abu Dhabi. Her children will start at Safa Community School in September, where tuition fees start at 47,000 AED ($12,800).

While her choice wasn’t all about the cost – Emma felt the school had the feel of a typical UK primary with an emphasis on nurturing and care

Nobody is forcing people to take these jobs and bring their families with them. If it is so important that her little darlings attend a school with the “feel” of a typical UK primary then perhaps she should have stayed in the UK?

But international education in Britain, Hong Kong, the US, Singapore and Australia also cost more than $20,000 a year. Schools may also charge extra for uniforms, examinations, extra-curricular activities and even books.

What we’re seeing here is children’s education being used as a status marker. Anyone who pays $20k per year for a kid to go to a private day-school in Australia is either extremely rich or an idiot.

“Schooling has become very expensive over the years,” says Sébastien Deschamps, ExpatFinder’s chief executive and founder. “That’s a challenge not only for the expatriate, but also for HR professionals because they still need to attract foreign talent and find ways to keep them.”

What he means is HR professionals (stop laughing at the back!) find it difficult to apply their ludicrous criteria of only recruiting from the very top universities, meet diversity quotas, and retain only the meekest and most compliant employees who they can bully and cajole into submission by threatening their career prospects at every point and turn. The last thing they want is a competent single bloke with little to lose turning up and trying to get things done.

When the oil price crashed in 2014 I thought the game was up for expatriate families in my industry and it would soon revert to being mostly local hires with the odd senior manager and a gaggle of single blokes living out of Porta-Cabins. I still don’t think I was wrong in that regard. The big players are still hanging on as their army of employees shriek over any changes to their entitlements, but it’s just a matter of time. The locals have gotten better, and there simply isn’t the money any more. The scrapping of the school fees is an early casualty of this new reality.

I’d just add, the impression I had from the HR was that by just being someone who wanted some average accom and a decent paycheck marked me out, most of the expats lived out of the company account with everything from childcare to power bills to expensive apartments. They preferred it if you were dependent on the company for everything.

I have mixed it with the expat communities around the place and spent a long time based in Jakarta, Indonesia amongst them and have also noticed the decline of the expat family status packages around the place. The in crowd all sent their kids to the Jakarta International School, a school that was later found to have been a hot bed of pedaophilia, I often wonder if some of the staff that I knew kids were caught up in it.

The other problem with expat family status is when they eventually return home. I know of two families that broke up on return mainly because the mum just couldn’t hack being the homemaker again, they just couldn’t adjust back to a normal lifestyle with domestic duties and no servants, drivers, cooks or whatever and that was the start of the end.

As long as they or their employers are paying I don’t mind. A bugbear of mine. Lads I knew who were posted abroad with their wives and children in tow. In due course, having been replaced by a younger more attractive local, memsahib and kids return home and become partially dependent on the state (my taxes). Several years later chummy also returns to England, with new wife and yet more sprogs. Childless Bernie ends up paying tax to help educate not one but two sets of kids.

We are a split family. Wife on non-UK local contract and me at home in UK with kids attending school here (two private, one state). What we notice is that the international school building boom has left several schools unable to fill places but also unable to lower prices as prices signal quality. What was a risky move with a waitlist is now a buyers market.

Local contracts are the future and as such middle managers are going to be the ones who suffer. If you are sufficiently senior you will be paid enough that it doesn’t matter. If not then tough. We are older, and therefore sufficiently senior, but quality matters in schooling and we don’t have the same confidence in the international schools, and their global citizen guff, as the really top notch schools my kids currently attend.

The expat market is dying as progressively fewer places could count as a hardship posting in need of bribes. The relocation people we had assigned to us were very open about it and how things were changing fast. Honestly almost anywhere is fine now, unless Saudi where I wouldn’t even interview despite the big packages on offer. Not worth the risk and the lack of freedom.

Back to the point though. Local schools are not going to be consistent with curriculum if you do move often then iBac or iGCSE are the only ways to go. This means fees.

In addition local schools require local language. Again tricky.

There are good reasons to pay and we can’t see the degree to which the quoted parents are really economising. Maybe their weekends away are no longer in first class. Maybe they are only flying back to UK three times a year in economy instead is business class. Maybe they are eating like locals instead of going to the expat supermarket and buying home brands and 3x the UK price.

Oh and should have said… wife is in Singapore so my remarks on schools are about the super expensive ones the article references. we have chosen to fly a lot instead. Five people fives time a year on average. Still cheaper than one extra set of school fees.

And modern internet speeds means commas are easy. Time zone difference is the biggest issue.

My old mate put his children through private school in England. £40,000 after already paying taxes. His attitude was: 2/3 of teachers in state are useless, but in private scholls only 1/3 of them are. He was an optimist.

I put my sprogs in French private school. Costs less, but still costs. They seem to regard school as a convenient place to meet your pals. Drives me mad, of course, but that’s normal for a parent. At least they get a netter class of friend, even if my eldest wants to join the British Army so that he can kill Frenchmen legally.

Most education happens around the dinner table. Discuss things.

At least the frog school gives a lot of reports:
Classe très héterogène = I haven’t got a clue.
Trop de bavardage = I can’t keep control
etc

I can relate to Sir Arthur Grimble, being posted to Balikpapan with a two year old and a new-born. Compound on the beach, cobras in the drains, supplies ferried in from Surabaya once a week, muddy roads, no western supermarkets unless we did a run to Singapore. And absolutely wonderful. Happy days!

Quite aside from the main point of discussion here (though it’s an interesting one – I wonder how much impact online education is going to have, having had some discussions with a start-up that’s working specifically with internet-based content delivery for smaller international schools that don’t have capacity to provide a full UK curriculum) I noticed that your amazon link isn’t an affiliate one. Think you’re missing a trick here Tim – it’s not all that uncommon for you to link to or mention a book or film, and it’s a fair bet that the kind of people who hang around your blog are likely to have similar tastes to you. I did find it pretty hassle-free to set up on my own website and if it helps pay the hosting then that can’t be a bad thing.

Shell Brunei used to have two country clubs.
One for the likes of me, and if they paid for it, some locals. One for the manager class, I was allowed in if I had a formal invite.
I didn’t accept any invitations after a bit because the wives were a nightmare. Constantly complaining about the amah, the cleaner, the chauffeur, that it rained in the afternoon, etc.
Locals – who cares if they’re African, Indonesian or Martian – getting richer and “stealing” our jobs is A GOOD THING. They will have more money to buy the next stuff we come up with.

Back to the point though. Local schools are not going to be consistent with curriculum if you do move often then iBac or iGCSE are the only ways to go. This means fees.

In addition local schools require local language. Again tricky.

Indeed, both of these are valid concerns which can justify paying fees. Only I sometimes get the impression – especially for those with kids under 11 – that this is what they tell themselves when really they’re status signalling.

Think you’re missing a trick here Tim – it’s not all that uncommon for you to link to or mention a book or film, and it’s a fair bet that the kind of people who hang around your blog are likely to have similar tastes to you. I did find it pretty hassle-free to set up on my own website and if it helps pay the hosting then that can’t be a bad thing.

Status signalling is complex. We pay >£40k a year in fees but drive a 15 year old car, M5 admittedly but 15 years old. When in for repair after someone hit me I got an E class merc for a couple of days. My boys loved the gadgets and new car thing as it was a few weeks old. I asked “one of these every year or school fees?” Both picked fees as the education they get, and got so far, is top notch. The car would have been a clearer status signal.

Second tier public schools though…. not so much. They went someone else before and it was cheaper and rubbish by comparison. This is s huge issue and you take risks with the cheaper option so perhaps sending to an international school is about risk reduction? Kids only get one shot at education and it takes ages to catch up from a bad start even if you are rocket scientist smart.

As someone in the business of being a long time expat (20+ years and counting, multiple locations) a topic close to my interest. It was certainly true that during the oil boom times, expat headcounts expanded quite considerably, raising expectations accordingly. A bit like when the university goers expanded from 3% to 50% of the population. So 47% are not getting their expectations, but it didn’t really change with the top 3%, there are still cream jobs for them. As the same with expats – high flyer with US investment bank and the Rolls-Royce package is still there. Overseas with a “pensions advisory firm”, and you will not get the same, lucky to get a relocation payment and no more than a UK salary.

What I do find surprising is the assertion that the companies don’t know what they are doing. In actual fact it can be very hard to get the right people to go expat, for the simple reason that most people now have working spouses and they are not keen to take an indefinite work break. The package has to effectively compensate the expatee for that risk, and school fees are just a tax efficient way of compensating for this.

What I do find surprising is the assertion that the companies don’t know what they are doing. In actual fact it can be very hard to get the right people to go expat, for the simple reason that most people now have working spouses and they are not keen to take an indefinite work break.

It’s based on my observed experiences: modern companies have a certain, quite specific, preferred type of employee which is their idea of the *right person*. Those are the ones who they struggle to get to go expat, because of the reasons you say. But they reject those who can easily go expat and are willing to because they are not the *right person* according to the company’s rather dubious criteria (hint: it has nothing to do with competence, abilities, and experience). So instead of looking first at those who are suited to expat life and from those drawing the best candidate, they simply take their favoured employees and try to entice them into going expat – hence the need to blow costs out of the water by accommodating their demands.

“Oh and the bloke above claiming JIS in Jakarta is a hot bed of pedophilia is just wrong, the two teachers were framed by the local police. It’s actually a pretty awful story”

Well I hope that I am wrong and if I am then it’s a travesty of justice that the teachers were locked up. Not really interested in posting other related material that differs from the western Australian Fairfax coverage and yes it was especially controversial given that is where Obama was schooled. Neither of us know what happened there and that’s the last thing I will say on it.